A S U

S m a l l B u s i n e s s D e v e l o p m e n t C e n t e r

R e v i s e d N o v e m b e r 2 0 0 8

This document was developed as an instructional aide for use with “The Business Plan” workshop. Quick Mart is a hypothetical business operation presented only as a case-study.

The Business Plan

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Personalized Cover Letter

QUICK MART, LLC Highway 3 and Main Street

A Convenience Store in 200X

Stanley and Virginia Smith, Owners

123 Any Street Fortsville, Texas 55555

(512) 555-5555 (512) 123-4567

(As our services are always CONFIDENTIAL and free of charge, the names and addresses, financial

information, etc. is fictional and not based upon anyone or real financial circumstances.) Today’s Date

Mr. John Loansalot, Vice President Commercial Lending Your Personal Bank 123 Main Street Boulder, Texas 55555 Dear Mr. Loansalot: Quick Mart, LLC requires $200,000 to renovate and begin operating a full-service convenience store. Of this amount, $60,000 will be invested by Stanley and Virginia Smith. A SBA guaranteed loan of $140,000 is requested for a period of fifteen years. The collateral to secure the loan will be the real estate, inventory, furniture, fixtures, and equipment belonging to the business. Personal assets are available for negotiation as additional collateral.

The enclosed financial proposal shows this to be a profitable business venture. There is a market for this service and the future growth is promising. Sufficient owner investment and collateral is provided and the financial statements show the ability to repay the loan. We have the experience, knowledge and desire to make Quick Mart a success!

We will contact you next week after you have had the opportunity to review this financial proposal. Thank you in advance for your time and interest.

Sincerely,

Stanley Smith Virginia Smith

Stanley Smith Virginia Smith

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Cover Sheet

BUSINESS PLAN

AND

FINANCIAL PROPOSAL

Quick Mart, LLC

Submitted by:

Stanley A. and Virginia M. Smith

123 Fourth Street

Fortsville, Texas 55555

(512) 123-4567

Today’s Date

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TABLE OF CONTENTS

MISSION STATEMENT AND EXECUTIVE SUMMARY – Outline ----------------------------------------------------------------- 6

MISSION STATEMENT --------------------------------------------------------------------------------------------------------------- 6

EXECUTIVE SUMMARY--------------------------------------------------------------------------------------------------------------- 6

FINANCIAL OVERVIEW -------------------------------------------------------------------------------------------------------------- 6

BUSINESS DESCRIPTION – Outline -------------------------------------------------------------------------------------------------- 8

NAME AND LOCATION OF BUSINESS --------------------------------------------------------------------------------------------- 8

PRINCIPAL OWNERS ----------------------------------------------------------------------------------------------------------------- 8

LEGAL STRUCTURE (Sole proprietor, Partnership, LLC, Sub-S or C-Corporation) --------------------------------------- 8

STATUS AND TYPE ------------------------------------------------------------------------------------------------------------------- 8

DEFINITION OF PRODUCTS/SERVICES ------------------------------------------------------------------------------------------- 8

MAJOR STRENGTHS AND CHALLENGES ------------------------------------------------------------------------------------------ 8

STRATEGIC GOALS & OBJECTIVES------------------------------------------------------------------------------------------------- 8

OPERATIONS PLAN – Outline ------------------------------------------------------------------------------------------------------- 10

LOCATION ---------------------------------------------------------------------------------------------------------------------------- 10

PHYSICAL FACILITY ---------------------------------------------------------------------------------------------------------------- 10

LABOR --------------------------------------------------------------------------------------------------------------------------------- 10

SUPPLIERS --------------------------------------------------------------------------------------------------------------------------- 10

MARKET ANALYSIS – Outline -------------------------------------------------------------------------------------------------------- 12

INDUSTRY TRENDS ----------------------------------------------------------------------------------------------------------------- 12

DESCRIPTION OF TOTAL MARKET ---------------------------------------------------------------------------------------------- 12

TARGET MARKET ------------------------------------------------------------------------------------------------------------------- 12

ANALYSIS OF COMPETITION ----------------------------------------------------------------------------------------------------- 12

PRODUCT/SERVICE DIFFERENTIATION --------------------------------------------------------------------------------------- 12

SALES STRATEGY – Outline ---------------------------------------------------------------------------------------------------------- 14

PRICING POLICY --------------------------------------------------------------------------------------------------------------------- 14

DISTRIBUTION ---------------------------------------------------------------------------------------------------------------------- 15

PROMOTIONAL EFFORTS --------------------------------------------------------------------------------------------------------- 15

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MANAGEMENT PROFILE – Outline ------------------------------------------------------------------------------------------------ 16

PERSONAL HISTORY OF KEY PARTICIPANTS --------------------------------------------------------------------------------- 16

DUTIES AND RESPONSIBILITIES OF KEY PARTICIPANTS ------------------------------------------------------------------ 16

COMPENSATION -------------------------------------------------------------------------------------------------------------------- 16

AVAILABLE RESOURCES ---------------------------------------------------------------------------------------------------------- 17

FINANCIAL ANALYSIS – Outline ---------------------------------------------------------------------------------------------------- 18

STARTUP COSTS -------------------------------------------------------------------------------------------------------------------- 18

SOURCE and USE of FUNDS ------------------------------------------------------------------------------------------------------- 18

CAPITAL EQUIPMENT LIST ------------------------------------------------------------------------------------------------------- 18

INCOME STATEMENT PROJECTION --------------------------------------------------------------------------------------------- 18

MONTHLY CASH FLOW PROJECTION and ASSUMPTIONS ------------------------------------------------------------------ 18

BALANCE SHEET PROJECTION --------------------------------------------------------------------------------------------------- 18

PERSONAL FINANCIAL STATEMENT ------------------------------------------------------------------------------------------- 18

PERSONAL INCOME TAX RETURNS --------------------------------------------------------------------------------------------- 18

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MISSION STATEMENT AND EXECUTIVE SUMMARY – OUTLINE

MISSION STATEMENT

EXECUTIVE SUMMARY

FINANCIAL OVERVIEW

NOTES:

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MISSION STATEMENT – Case Study

Quick Mart’s mission is to provide residents, visitors, and commuters of the Fortsville area with convenience items and gasoline at competitive prices. Company policy firmly supports the delivery of quality products and

superior customer service while working towards maximum profitability.

EXECUTIVE SUMMARY – Case Study

Quick Mart, LLC requires $200,000 to renovate and operate a full-service convenience store in Fortsville, Texas. A $60,000 owner injection is being pledged by the husband and wife team of Stanley and Virginia Smith. The business will be operated as a Limited Liability Company (LLC), and will offer grocery, household, pharmaceutical, and novelty items, as well as operating a snack bar and fuel island.

Mr. Smith’s extensive industry experience includes ten years in the operations and management of 7-11 Stores in South Texas. Mrs. Smith has several years of experience in accounting support services and will play an active role in the financial management of the business.

Extensive primary and third-party research indicates that, given the seasonal nature of this geographic area, Quick Mart’s projected base of residential customers will be complemented by an influx of winter tourists and hunters. Further, Quick Mart’s highway location and billboard marketing campaign will attract commuters in this rapidly developing economic area. Direct competition is limited to Fred’s Corner Store, a small business offering fresh fruit, vegetables, and a variety of canned goods. Indirect competition is found with H.E.B. and Super S in the neighboring community of Boulder.

Mr. and Mrs. Smith anticipate that their success will be furthered by offering goods and services not available at any other store in Fortsville: novelty tourist items, pharmaceuticals, and Senior Citizen discounts. The Smith’s ability and willingness to invest substantial cash in the launching of this business is further strengthened by the lack of personal financial dependence on business profits during the early years of the business.

Financial Overview – Case Study

A review of this financial proposal shows Quick Mart to be sound, low-risk investment. Cash flow is more than sufficient to service the debt and profit margins are better than RMA Industry standards. First year sales are projected at $300,000 with only $199,765 required to break even. The debt to equity ratio is reasonable at 2.33:1 and reflects the owners’ personal commitment to the business. The bank’s risk would be limited with collateral valued at 1.21 times the loan amount and the loan backed by an SBA guarantee. In addition to the above, management’s industry experience and personal credit are outstanding. Considering the above information, a $140,000 SBA-guaranteed loan to Quick Mart would be a sound investment.

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BUSINESS DESCRIPTION – OUTLINE

NAME AND LOCATION OF BUSINESS

PRINCIPAL OWNERS

LEGAL STRUCTURE (SOLE PROPRIETOR, PARTNERSHIP, LLC, SUB-S OR C-CORPORATION) STATUS AND TYPE New start, expansion, acquisition Manufacturing, retail, wholesale, service, or a combination

DEFINITION OF PRODUCTS/SERVICES Narrative NAICS Illustration Competitive comparison

MAJOR STRENGTHS AND CHALLENGES

STRATEGIC GOALS & OBJECTIVES

NOTES:

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BUSINESS DESCRIPTION – Case Study

Overview: Quick Mart, a full service convenience store with Fuel Island, will be located at Highway 3 and Main Street in Fortville, Texas. Located near the county’s largest city of Boulder, Fortsville is a small, home-town community and popular hunting and winter tourist resort. Quick Mart will be owned and operated by the husband and wife team of Stanley A. and Virginia M. Smith, residents of Fortsville for the last five years. The business will be operated as a Limited Liability Corporation (LLC), and will offer grocery, household, pharmaceutical, and novelty items, as well as operating a snack bar and fuel island.

Mr. Smith has been involved in convenience store operations and management for the past ten years. After analyzing the community during his residency, has decided to take an abandoned gas station and renovate it to become a full-service convenience store catering to local residents, commuter, and winter hunters and tourists. As there are no convenience stores located in the community other than Fred’s Fruit Stand at the corner of 4th and Main, most residents, commuters, and winter visitors in the nearby recreational vehicle park purchase convenience items in neighboring Boulder.

Products and Services: Quick Mart will provide local residents an array of much needed products and services. The Grocery section will include canned juices, fruits and vegetables, dog food, baby food, chips, and other various dry-storage goods. Cigarettes, beer, publications, and snacks will compliment the Grocery section. The Frozen section will include ice cream, dairy products, and chilled wine. Pharmaceuticals such as first aid products, diapers, non-prescription cold medicines and ointments, pantyhose, toys, and other related products will comprise the Personal Item section. The Home and Auto section will include insecticides, cleansers, paper products, and small automotive supplies like oil, transmission fluid, fuses, and funnels. The Snack Bar (popcorn, hotdogs, deli items, and fresh produce) and Fuel Island will be additional customer conveniences that will truly make Quick Mart a full-service convenience store (SIC 5411.)

Quick Mart will focus on carrying a wider variety of products than competitors and will offer them at competitive prices. Floor space larger than competitors, efficient inventory storage, and creative displays will allow Quick Mart to provide items not available in the local market.

Major Strengths and Challenges: Fortsville, with a current population of 950, will not generate adequate customer traffic during the May to August off-season. However, a highly visible, accessible location will help Quick Mart enter the market and capitalize on increased traffic during the fall and winter hunting and tourist season when, according to the South Texas Chamber of Commerce, traffic increases by 175%. During the first year of operation, owner salaries are limited due to a stable personal financial situation. (See Financial Analysis – Personal Financial Statement.)

Strategic Goals and Objectives:

1. Increase sales at a rate of 15% per year to reach a level of $400,000 by the third year.

2. Improve overall gross margin by 1% per year to a level of +29% (from 27.3%) over the current product line and maintain that level.

3. Add products and services to meet market demand, again at 29% margin or above.

4. Improve inventory turnover to 10% over industry standards; reduce the cost of goods sold.

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OPERATIONS PLAN – OUTLINE

LOCATION

Does the location have an impact on your ability to reach customers? What are the physical characteristics of the current or proposed location? PHYSICAL FACILITY (Discuss existing status and required changes.)

Vehicle access for customers and suppliers Inventory storage Equipment, fixtures, and furniture Electricity, heat, air conditioning, venting, wastewater Merchandise display Customer seating Product preparation space Compliance with current and future environmental regulations Capability for expansion LABOR What skills and experience are required to operate this business?

SUPPLIERS What are your sources of supply? Do you depend on a single supplier? (Discuss supply alternatives,

pricing, or other supplier factors that could affect your ability to manufacture your product or perform your duties.

NOTES:

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OPERATIONS PLAN - Case study

Location: Highway 3 is a four-lane road with a median divider. The corner location (Highway 3 and Main St.) allows easy access from all sides. Traffic patterns documented by Mr. Smith during a two-week period coincide with peak and slow periods typical of convenience stores: peak times between 11 a.m. and 2 p.m. and from 4 p.m. to 8 p.m.

Physical Facility: Quick Mart will renovate a 30’ by 50’ facility constructed of cinder blocks. The interior will be air conditioned and lit by energy efficient florescent lighting. Two walk-in refrigerators will be devoted to soft drinks and beer. A third refrigerator will hold dairy products. Dry storage shelving will divide the store into main aisles, with products located on both sides of the cases as well as along shelves along the walls. Walls will be repainted in a light color to make the store look bigger, to keep daytime lighting costs down, and to act as a neutral backdrop for a wide range of products.

New display cases will be purchased form Display Experts Corporation. An electronic cash register with point of sale system will be purchased to handle all sales, including gasoline. Equipment included in the sale of the building includes a checkout counter, shopping baskets, hand trucks, bottle and stock carts, a stepladder, hot dog machine, microwave, popcorn machine, drop safe, and pricing guns. Gasoline service will be through a lease agreement with Gaso Gas Oil Company located in Boulder, Texas. Gaso will be responsible for removal of existing underground storage tanks, installation of new storage tanks and pumps, the customer gasoline use meters, and for the ongoing maintenance of all related equipment. These improvements will be in full compliance with the requirements of the Texas Water Commission.

The parking area as well as the area around the fuel island is paved. Restrooms are outside the store in a well-lit highly visible location. A security camera will be in place by the Grand Opening. Only minor renovations will be required to make the parking, store layout, and restrooms handicapped accessible. Quick Mart will comply with all requirements of the County Building Inspections and the Code Compliance Department regulations.

Labor: Quick Mart will be managed and staffed by the husband and wife team of Stanley and Virginia Smith. Mr. Smith has ten years of experience in the management and operation of a convenience store, while Mrs. Smith has several years experience in accounting support services. Mr. Smith will handle daily store operations and customer service, while Mrs. Smith will handle the cash register, maintain financial records, purchasing, and inventory. Their two children, ages 14 and 16, will help with stocking and daily upkeep. Part-time employees will address the demands of increased sales volume during the tourist and hunting season.

Suppliers: Purchases will be made from McLane Grocery Distribution and from various wholesalers in Boulder. McLane offers competitive pricing, a generous payment period, as well as a reputation for dependable delivery. Grocery Supply Company (formerly Sweeney) offers similar pricing but does not deliver as frequently.

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MARKET ANALYSIS – OUTLINE

INDUSTRY TRENDS

1. Projections/ trends for your industry or business field 2. At what stage of the product/service life cycle will your business be entering the market? (Introduction,

growth, maturity, saturation, or decline)

DESCRIPTION OF TOTAL MARKET In order to generate a consistent and increasing sales flow, the entrepreneur must become knowledgeable about the people, businesses, or public institutions who might buy the product or service. One way to define the total market is to use important characteristics from the internet, census, local chambers of commerce, the public library, trade associations, etc.

1. What is the present size of the entire market? 2. What is your market’s growth potential? 3. Discuss the economic, social, demographic, and political characteristics of this market and the impact on

your business.

TARGET MARKET The target market is that segment of the total market which is comprised of likely or potential customers. A clear understanding of the demographics; geographic location, age, income, education, sex, etc. and psychographic data; likes, dislikes, and tendencies that affect purchasing patterns can help you develop a strategy to reach the target market through your sales plan.

1. What is the size of your target market? 2. What percentage of the target market do you anticipate? 3. Customer profile 4. How will you attract and keep customers? 5. How can you expand your market?

ANALYSIS OF COMPETITION

1. Identify primary and secondary competitors. 2. How do they compare to your business? (Sales volume, number of employees, locations, customers) 3. Is their business steady, increasing, or decreasing? 4. What are your competitors’ strengths and weaknesses? 5. What have you learned by observing them?

PRODUCT/SERVICE DIFFERENTIATION 1. What unique niche of the market will this business fill? Has anyone attempted to fill this niche? If not, why?

Is there a patent, trademark, copyright, or trade secret that will give you a head-start on the competition?

2. Where do you believe you have a business advantage? (Higher quality product, lower price, superior service, quicker delivery time)

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NOTES:

MARKET ANALYSIS – Case study

Industry Trends: The popularity of convenience stores continues as people become more work-oriented, creating less time for household purchases. According to the National Association of Convenience Stores (NACS), convenience stores generally stock 1,500 to 3,000 items, compared to 7,000 or more in supermarkets. The closest supermarket is in Boulder, 27 miles from Fortsville. Quick Mart will carry a wide line of goods and services in stores, allowing customers to satisfy more needs quickly in one location without having to drive to Boulder. NACS estimates there are some 71,200 convenience stores, with 1000 more established each year in the suburbs and concentrated city areas.

Description of Total Market: Fortsville is isolated from other residential areas in Hidalgo county, and during the peak hunting and tourist months of September through April, the population increases from 850 to 1,488 (175%). Highway 3 is a major thoroughfare to Boulder and offers a significant secondary target market for Quick Mart from the travelers going to and from the city needing gas, food, or other services. Quick Mart is the only store located along the highway, giving them a large potential share of the secondary market.

Growth potential for Fortsville and Quick Mart is promising. Boulder’s population has increased consistently over the past ten years and the number of businesses in the city has risen by 30% during this time period. The annual Texas Square Dancing and Polka Championship Tournament in September increases tourist activity tremendously. Last year’s tournament hosted over 700 competitors. During this week of activity, over 1,000 people visited Fortsville, increasing potential for sales and visibility for potential new residents. Hunting leases, which are growing in popularity, provide a steady, recurring source of visitors in need of supplies.

Fortsville is located in one of the more economically stable areas of South Texas. It is known as a quiet community consisting of mainly middle income families. This hometown image has made Fortsville appealing to winter tourists as a temporary residence. Year-round population is approximately 60% Hispanic, 40% Anglo, and has a conservative political history. Social activities for Fortsville residents take place almost entirely in Boulder except for Wednesday Night Bingo, which brings over 50 Boulder residents to Fortsville.

Target Market: As Quick Mart is the only store in the area selling food, household items and gas, they anticipate reaching 80% of this primary market of year-round residents and Winter Texans. Residents of Fortsville have expressed a need for a full-service convenience store such as Quick Mart, and the Grand Opening specials and incentives will provide sufficient attraction for first-time customers. Fast, friendly service will build customer loyalty and repeat business. Quick Mart will also offer weekly specials, homemade novelty items, and Senior Citizen discounts to maintain the market share. Quick Mart will apply to become a distributor of Texas Lottery tickets.

Quick Mart hopes to expand its market through Boulder’s increasing population. As the neighboring city grows more crowded, more people will desire residency outside city limits. Valley Developers, Inc. purchased a 400 acre parcel of wooded land 10 miles outside of Boulder, and has recently begun offering 3 to 5 acre tracts of land for housing; creating the potential for approximately 100 new residences within the next few years. With a nearby location and tradition of quiet family living, Fortsville is a good candidate for similar development. Boulder was recently selected as the site for a new perfume manufacturing facility which will initially employ 50 with projected employment of 100 by July of this year.

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MARKET ANALYSIS – Case study

Current market demand has been documented through market research compiled by Mr. and Mrs. Smith. Research shows 73% of all Fortsville residents are currently purchasing “specialty” items in Boulder that will be provided by Quick Mart. Nearly 82% of residents presently purchase everyday “necessity” items from Fred’s Corner Store. However, 75% of those purchasing goods from Fred’s Corner Store expressed dissatisfaction with availability and price. When asked about the need for a local convenience store in Fortsville, 93% of the respondents indicated “Yes”. The same survey indicates that 65% of Fortsville residents commute to Boulder for employment on a daily basis. The remaining 35% travel to Boulder once every ten days, increasing in the need to replenish items and purchase gasoline at a store located in Fortsville.

Customer Profile: There are three major customer groups: (1) the transitory hunters looking for essential last minute items such as beer, bread and food items, for which cost is not a major consideration; (2) busy full time workers, aged 20-50, stopping on before or after work for gas, milk, bread and eggs. (Convenience is primary with price secondary but not exorbitant); and (3) senior citizens, who look for convenience yet are relatively price sensitive.

Competition: Quick Mart’s main competitor is Fred’s Corner Store, located on 4th and Main Street in Fortsville. This business carries fresh fruit, vegetables, and a variety of canned goods. However, his inventory is very limited; carrying only selected name brands which can be purchased much cheaper from grocery stores in Boulder. He does not provide gas or snack bar services. A former employee of Fred’s Corner Store estimates sales volume to be roughly $90,000 a year. Fred’s Corner Store currently employs two part-time assistants who help during peak evening hours. Sales volume increased two years ago when they began accepting credit cards. The only recognizable advantage is large quantities of fresh fruits and vegetables.

Quick Mart’s prime location will attract traffic from the highway in addition to the local residents. Fred’s Corner Store has little opportunity to attract any new customers due to his downtown location. Quick Mart plans to advertise and give sales incentives, something Fred’s Corner Store has lacked. All items will be purchased from local wholesalers in Boulder and resold at a 35% profit. Extending store credit to local customers was considered, but after observing the trouble Fred’s Corner Store has collecting from residents, the idea was dismissed. The store will accept cash, local personal checks, and major credit cards.

Indirect competition is found in neighboring Boulder, with two full-service convenience stores, an H.E.B. Grocery, and a Super S Grocery. At a distance of 27 miles, Quick Mart hopes to capture patrons not willing to travel for convenience items. Quick Mart does not expect to substantially affect the market share of the large grocery stores.

Competitive Advantage: Quick Mart desires to set a precedent in Fortsville as a full service convenience store with an economical image, offering a wide range of competitively priced products and services in one location. Need expressed by residents combined with the consistent popularity of convenience stores predict a favorable business climate for Quick Mart. One area of potential profitability is in novelty items Winter Texans frequently purchase as gifts for friends and relatives.

SALES STRATEGY – OUTLINE

PRICING POLICY

1. What is the relationship between the price you will charge and the image of the business you are trying to create?

2. How will you price? (Mark-ups, discounts, labor/ materials+ profit, etc)

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DISTRIBUTION

1. Describe the channel of distribution you will use to reach your target market. 2. How does the competition get its product to the market?

PROMOTIONAL EFFORTS Make sure your cash flow reflects monies budgeted for these activities and the image/position you are attempting to establish match your promotional activities.

1) Advertising

a) Internet Website b) Direct mail ~ store sign ~ radio/TV c) Magazines, newspapers, and trade journals d) Trade shows ~ Novelties (calendars, pencils, magnets, etc) e) Yellow pages

2) Personal selling

Every promotional effort is an expense of time or money. The advertising tools listed above involve substantial expenditures of money. How does this apply to your business?

a) Customer service, knowledgeable staff b) Complimentary products/services c) Community involvement

3) Publicity

Newspapers, radio and television news stations cover stories of interest to their audience: unique offerings, interesting and special events. This advertising is free – if you can get it!

4) Sales Promotions

a) Temporary promotion – (samples/ free product) b) Coupons/ Rebates c) Customer Conveniences (Store credit, major credit card acceptance, free delivery, free parking,

easy access, telephone orders, hours of operation)

SALES STRATEGY – Case study

Pricing policy: As is typical for the industry, Quick Mart will have a 15% mark-up on gasoline, 35% on all staple items, 45% on taxable items, while pharmaceutical items will have a 60% markup. Weekly specials on selected items will be offered to all Quick Mart customers. Other sales incentives will be offered periodically. Senior Citizen discounts of 10% will be available on a daily basis, and during the tourist season, additional sales promotions are planned.

Hours of Operation: Quick Mart will attempt to create an image of an economical store with easy accessibility and quick service. It will operate seven days a week, except on major holidays, such as Christmas and Thanksgiving. Store hours will be 6 a.m. to 9 p.m. Sunday through Thursday, and 6 a.m. to 11 p.m. Friday and Saturday.

Promotional Efforts: The Advertising Plan involves many different types of media. Quick Mart will run newspaper advertisements featuring weekly specials and coupons in the Boulder Area Herald newspaper. Two billboards along Highway 3 will be utilized to make northbound and southbound highway travelers aware of the

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products and services just ahead. Mrs. Smith, who handles marketing for the store, is working with a Marketing Specialist from the Small Business Development Center to develop a cost-effective advertising campaign for Quick Mart.

Personal selling will be a major factor in building repeat business. Family members and temporary help will consistently promote the purchase of additional items or the added special touch by recognizing when such opportunities arise. Some examples are: “We have free paper oil funnels on hand. Do you need one for this quart of oil?” and “How about a fresh donut to go with that cup of hot coffee?”

The local television and radio stations will be approached to cover the Grand Opening for free publicity. Acceptance from the local community is hoped to be gained by involving the store in local civic and charity events. The Grand Opening bonanza will be supported by Coca-Cola and Decker Hot Dogs, who will provide free snacks and refreshments.

Customer Conveniences: A wide variety of products and services available in one location is the convenience sought by area residents, commuters, hunters, and winter tourists. The average shopper, according to Entrepreneur Group’s “Convenience Food Store” Business Manual, visits a convenience store two to five times a week. Competitive prices, fast service, and friendly personnel will make Quick Mart customers feel good about patronizing Quick Mart. Longer store hours than offered by the competition, highway access, ample parking, clean restrooms, and a security camera are other customer conveniences that will add to the success of Quick Mart.

MANAGEMENT PROFILE – OUTLINE

This section should include the personal history of the principals, related work experience, duties and responsibilities, salaries, organizational chart, and resources available.

PERSONAL HISTORY OF KEY PARTICIPANTS Complete this section for each key participant in the business

1. Business background 2. Management experience 3. Education (formal and informal learning experiences) 4. Personal data (including full name and spouse’s full name, present address, social security number, driver’s

license number) 5. Relate past experience to future success potential (Include letter of recommendation, if possible)

DUTIES AND RESPONSIBILITIES OF KEY PARTICIPANTS

1. Organizational structure (who are the decision makers? Is there appropriate delegation of authority and tasks?)

2. Job descriptions

COMPENSATION (Salaries, hourly rates, other incentives)

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AVAILABLE RESOURCES

Do you have the marketing, management, and financial skills to do it all yourself? If not, then show relationships that fill the gaps to create a fully capable business enterprise. Do you network with others in your industry to stay current on changes in the marketplace?

Professional (lawyer, CPA) 1. Professional (lawyer, CPA) 2. Insurance 3. Consultants 4. Associations (Chamber of commerce, professional or trade groups) 5. Banking

MANAGEMENT PROFILE – Case Study

Name: Stanley A. Smith

Present Address: 123 Fourth Street, Fortsville, Texas 55555

Stanley Smith worked for 7-11 convenience stores in rural Texas communities for over ten years after graduating with a B.B.A. in Business Management from the University of Houston. He began as Store Assistant Manager, was promoted to Store Manager, and spent five years as an Area Supervisor. In his capacity as an Area Supervisor, he supervised a team of team of twelve Store Managers. Before and during his studies at the University of Houston, Mr. Smith worked as a route distributor for Mrs. Baird’s Bread.

Name: Virginia M. Smith

Present Address: 123 Fourth Street, Fortsville, Texas 55555

Virginia Smith worked as a sales clerk for J.C. Penney Department Store in Houston for seven years while studying Business Administration at Houston Junior College. After obtaining an Associates Degree in Bookkeeping, she was hired by Super S Grocery in Boulder, where she performed various accounting duties for five years. She currently works full-time for Rural Bookkeeping Systems, Inc. and will continue in a part-time capacity until the business is established.

Duties and Responsibilities of Key Participants: Both Mr. and Mrs. Smith will have a voice in the management of Quick Mart. Mr. Smith will handle marketing and stocking of inventory. Mrs. Smith will handle marketing and handle purchasing and inventory. Both will work the cash register and interact with customers. The teenage children will stock the shelves and help with the store’s daily upkeep when not in school.

Compensation: Initially, the Smith’s will be paid a combined monthly salary of $1,000. Only when the store’s gross earnings have been established will they adjust their salaries upward.

Available Resources: The Smith’s will use Jones & Jones Accounting Services periodically during the year, as Mrs. Smith will maintain the store’s records such that the accountant will only need to compile the financial statements for income tax purposes. She will consult with him during the year regarding tax information and quarterly reports. Edward M. Harris, attorney at law, is currently on retainer and has already advised that Quick Mart organize as a Limited Liability Company and install a security camera.

Mrs. Smith is working with a Marketing Specialist from Small Business Development Center in order to fine-tune the Quick Mart advertising campaign. In order to stay abreast of changes and opportunities within the industry, Quick Mart will join the National Association of Convenience Stores.

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FINANCIAL ANALYSIS – OUTLINE

STARTUP COSTS

SOURCE AND USE OF FUNDS

CAPITAL EQUIPMENT LIST

INCOME STATEMENT PROJECTION

MONTHLY CASH FLOW PROJECTION AND ASSUMPTIONS

BALANCE SHEET PROJECTION

PERSONAL FINANCIAL STATEMENT

PERSONAL INCOME TAX RETURNS

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STARTUP COSTS

DESCRIPTION AMOUNT

Building $75,000

Land 20,000

Remodeling/Improvements 30,000

Fixtures & Equipment 8,500

Furniture 1,000

Outdoor Sign 1,500

Inventory 25,000

Deposits 5,000

Association Fee 200

Advertising 1,800

License, Permits, Insurance 500

Office/Operating Supplies 200

Loan Fees (4.5%) 6,300

Working Capital 25,000

TOTAL STARTUP COSTS $200,000

NOTES:

HOW MUCH WILL IT COST YOU TO ACCOMPLISH YOUR PROJECT?

These figures should be reflected in the pre-startup column of your cash flow statement. Allow enough working capital for expenses during the early period.

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SOURCE AND USE OF FUNDS

Description Loan Owner Injection Total

Inventory 4,000 21,000 25,000

Furniture and Equipment 11,000 11,000

Land 20,000 20,000

Building 75,000 75,000

Improvements 30,000 30,000

Deposits 5,000 5,000

Working Capital 25,000 25,000

Organizational Costs 9,000 9,000

TOTAL 140,000 60,000 200,000

Of the total project cost you’ve identified for starting the business, how much are you contributing, and how much comes from the financial institution or investor? What is the money being spent on?

NOTES

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CAPITAL EQUIPMENT LIST

DESCRIPTION MODEL COST/FMV* CONDITION SUPPLIER

MAJOR CAPITAL EQUIPMENT

Refrigerator-Soda AX199 $1,650 New Acme Equipment

Refrigerator-Beer AX199 1,650 New Acme Equipment

Refrigerator/Freezer BX215 2,500 Rebuilt Acme Equipment

Sign 1,500 New Letrero Sign Co.

MINOR CAPITAL EQUIPMENT

Dry-storage shelving Aisle 300 $900 New Expert Displays

Security Camera ZZ23456 800 New Live Eye, Inc.

Electronic Cash Register

BL222 1,000 New NCR

Furniture 1,000 Used Thrifty Furniture

TOTAL CAPITAL EQUIPMENT

$11,000

*Fair Market Value

What major and minor equipment will be used in the business?

NOTES:

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INCOME STATEMENT PROJECTION

Quick Mart Fortsville, Texas Projected Income Statement (First 12 Months)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec Total

Sales

Cash Sales 7500 11250 13500 15000 14250 11250 11250 12750 18000 22500 20250 180000 60.0 %

Credit Card Sales 5000 7500 9000 10000 9500 7500 7500 8500 12000 15000 13500 120000 40.0%

Total Sales 12500 18750 22500 25000 23750 18750 18750 21250 30000 37500 33750 300000 100.0%

Credit Card Service Charges -150 -225 -270 -300 -285 -225 -225 -255 -360 -450 -405

-3600 -1.2%

Net Sales 12350 18525 22230 24700 23465 18525 18525 20995 29640 37050 33345 296400 98.8%

Less Cost of Goods Sold 8938 13406 16088 17875 16981 13406 13406 15194 21450 26813 24131

214500 71.5%

Gross Profit 3413 5119 6143 6825 6484 5119 5119 5801 8190 10238 9214 81900 27.3%

Operating Expenses

Advertising & Promotion 110 110 110 110 30 30 30 30 110 110 110 1000 0.3%

Amortization 150 150 150 150 150 150 150 150 150 150 150 1800 0.6%

Bank Charges 25 25 25 25 25 25 25 25 25 25 25 300 0.1%

Depreciation 502 502 502 502 502 502 502 502 502 502 502 6018 2.05%

Insurance 125 125 125 125 125 125 125 125 125 125 125 1500 0.55%

Interest 1225 1222 1219 1216 1214 1211 1208 1205 1202 1199 1193 14508 4.8%

Legal & Professional 50 50 50 50 50 50 50 50 50 50 50 600 0.2%

Telephone 80 80 80 80 80 80 80 80 80 80 80 960 0.3%

Payroll 1860 1860 1860 1860 1000 1000 1000 1000 1860 1860 1860 18880 6.3%

Payroll Tax 231 231 231 231 124 124 124 124 231 231 231 2341 0.8%

Repairs & Maintenance 60 60 60 60 40 40 40 40 60 60 60 640 0.2%

Supplies 50 50 50 50 40 40 40 40 50 50 50 560 0.2%

Taxes and Licenses 100 100 100 100 100 100 100 100 100 100 100 1200 0.4%

Utilities 460 465 465 490 515 590 690 690 690 640 520 6825 2.3%

Miscellaneous 50 50 50 50 50 50 50 50 50 50 50 600 0.2%

Total Operating Expenses 5077 5079 5076 50994044 4044 4116 4213 4210 5284 5231 5105 57732 19.2%

Net Profit -1665 39 1066 1726 2440 1003 906 1591 2906 5007 4109 24168 8.1%

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MONTHLY CASH FLOW PROJECTION

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ASSUMPTIONS USED IN CASH FLOW PROJECTION

TOTAL SALE VOLUME

The projected sales of $300,000 for the first year of operation are based on a conservative industry estimate. According to Financial Studies of the Small Business, 200X, XXth edition, the average sales for convenience stores is $300,000. Mr. Smith’s extensive industry experience for convenience store gross revenues in rural communities of this size is between $225,000 and $275,000 annual gross sales.

CASH SALES

60% of total sales volume

CREDIT CARD SALES

40% of total sales volume

CREDIT CARD SERVICE CHARGES

3% of credit card sales volume

INVENTORY MARKUP/COST OF GOODS SOLD

A mark-up of 15% will be placed on gasoline sales, 35% on all staple items and 45% on taxable products, while pharmaceutical items will have a 60% markup. A 40% markup was used for this projection. This equates to a 71% Cost of Goods Sold. A detailed cash flow projection by product category is available.

GROSS WAGES

Paid to part-time employees during the peak tourist season (September-April). Two employees at approximately 20 hours per week each at minimum wage.

PAYROLL EXPENSES

12.4% of salaries based on information obtained from Quick Mart’s CPA.

SUPPLIES

Consists of administrative supplies to be used in the business and is assumed to remain constant at $40 each month for the off season (May-August) and $50 per month during the peak season (September-April).

REPAIRS AND MAINTENANCE

Estimated at $60 during peak season and $40 for off season. Consists of brooms, mops, and other cleaning materials and janitorial supplies. Equipment repair costs are covered by service agreements included in the purchase price.

ADVERTISING EXPENSE

Flyers, newspaper ads, and other materials will be needed at regular intervals. Estimated cost is $110 per month during the peak season, dropping to $30 per month during the off season. The $1,800 startup cost includes two billboards along Highway 3.

ACCOUNTING AND LEGAL

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Estimated at $600 per year for accounting services: compilation of financial statements and income tax. Legal fees totaling $575 for consultation have already been paid using the personal account of Mr. and Mrs. Smith.

TELEPHONE

The business line to be installed in the store is estimated at $80 per month. No long distance calls are expected to be made, as calls to Boulder are still within the general call area.

UTILITIES

Includes electricity, water, and garbage pickup with higher rates in the summer due to increased air conditioning requirements.

INSURANCE

The store will have liability, fire, and theft insurance. Life insurance on the owners, as required by the loan will also be paid by the store. Monthly insurance is $125 with no down payment.

INTEREST EXPENSE

This expense varies monthly and is based on amortization of a $140,000 loan at 10.50% for 15 years.

MISCELLANEOUS

Averaged at $35 per month during peak season and $20 per month during the off season.

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BALANCE SHEET PROJECTION

Start-up Year-End

Current Assets

Cash 25,000 52,218 23.0%

Accounts Receivable 0 1,350 0.6%

Inventory 25,000 31,706 13.9%

Deposits 5,000 5,000 2.2%

Other Current Assets 0 0 0.0%

Total Current Assets 55,000 90,274 39.7%

Property & Equipment

Furniture & Equipment 11,000 11,000 4.8%

Land 20,000 20,000 8.8%

Building 75,000 75,000 33.0%

Improvements 30,000 30,000 13.2%

Acc. Depreciation 0 -6,018 -2.6%

Total Property & Equipment 136,000 129,982 57.1%

Other Assets

Organizational Costs (Net Amort.) 9,000 7,200 3.2%

Total Assets 200,000 227,456 100.0%

Current Liabilities

Accounts Payable 0 6,033 2.7%

Income Taxes Payable 0 1,088 0.5%

Payroll Tax Payable 0 231 0.1%

Sales Tax Payable 0 0 0.0%

Current LT. Debt (Bank) 4,063 4,510 2.0%

Total Current Liabilities 4,063 11,861 5.2%

Long-Term Liabilities

Long-Term Debt 135,937 131,427 57.8%

Total Long-Term Liabilities 135,937 131,427 57.8%

Total Liabilities 140,000 143,288 63.0%

Capital

Owner's Equity 60,000 60,000 26.4%

Dividend Distributions

Retained Earnings

Current Profit or (Loss) 0 24,168 10.6%

Total Capital 60,000 84,168 37.0%

Total Capital & Liabilities 200,000 227,456 100.0%

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Market Research

Samples of Internet Research Findings